Dow Jones futures rose slightly late Wednesday, along with S&P 500 futures and Nasdaq futures. The stock market rally suffered another day of heavy losses as a big jump in inflation scared investors, pushing Treasury yields significantly higher.
Bitcoin tumbled after Tesla CEO Elon Musk said his company would no longer let people make vehicle purchases via Bitcoin, citing the cryptocurrency’s heavy energy use.
The Colonial Pipeline restarted operations Wednesday afternoon, as gasoline supplies ran increasingly low across the East Coast. Chinese e-commerce giant Alibaba (BABA) is on deck to report earnings early Thursday
After rallying from intraday lows on Tuesday, especially the Nasdaq, the major indexes and small-cap Russell 2000 all undercut Tuesday’s lows and closed near their worst levels. Chip stocks were hammered again but so were tech titans, software and highly valued growth stocks, including the likes of Tesla, Apple (AAPL), Microsoft, Amazon, Square and Lam Research. Housing-related stocks such as Floor & Decor sold off hard again. Miners and metals stock tumbled, though their charts generally look OK. Financials also gave up ground after initially holding up.
One positive sign is that investors are becoming a little more fearful and a little less bullish, according to the CBOE Volatility Index, put-call ratio and the Bulls vs. Bears reading. While nowhere near excessive bearishness that might foreshadow a market bottom, they at least are no longer excessively bullish.
Outdoor cooler and drinkware maker Yeti Holdings (YETI) and artificial decking products firm Azek (AZEK) report before the open, along with Alibaba stock. Yeti stock fell back into a buy zone Wednesday. Azek, which dropped below a buy point Tuesday, tumbled below its 50-day line on Wednesday and flashed an automatic sell signal. It fell further below the buy point and below its 50-day line. BABA stock is trading near 10-month lows as Chinese internets and U.S.-listed Chinese equities overall have struggled for months.
Inflation Jumps, With PPI On Tap
Consumer prices rose 0.8%, the Labor Department reported Tuesday morning, while core CPI popped 0.9%, the most since 1982. Both were much higher than expected. Year over year, consumer prices swelled 4.2%, the highest since 2008. Core inflation climbed 3%, the most since 1996.
Swelling price pressures are squeezing consumers and many businesses. But the Federal Reserve says higher inflation will be “transitory,” fading again in 2022. But the market fear is that inflation will rise even more than expected, and stay higher.
Unless Fed policymakers can convince investors that higher inflation will be temporary, or that they’ll quickly respond to sustained price pressures without overreacting, then financial markets may remain under a cloud…